Dive Brief:
- Syngenta announced plans to divest its global vegetable seed business and enact a share buyback program. The move comes about a week after Syngenta rejected Monsanto's last takeover proposal, causing Monsanto to abandon the pursuit.
- The vegetable seed unit comprised $663 million in sales last year out of $3.16 billion in sales for Syngenta's entire seed business.
- "The board and management are determined to accelerate shareholder value creation, and our actions today underpin our commitment to do so," according to Michel Demaré, Syngenta's chairman, in a news release.
Dive Insight:
"By demonstrating and unlocking the inherent worth of our leading global seeds portfolio we can create significant additional value" for shareholders, Syngenta CEO Mike Mack said in a news release.
It didn't take long for Syngenta to feel the need to "create significant additional value" for shareholders after so many of them were interested in negotiating with Monsanto over the now defunct takeover bid. A survey of former and current Syngenta shareholders found that 92% of shareholders supported negotiations between the two companies.
Shareholders' average desired asking price was 473 Swiss francs (now about $486) per share, only about 5% higher than Monsanto's former 449 francs (now about $461) per share proposal, the highest offer at that time, the survey found. That desired asking price was very close to Monsanto's final offer of 470 francs (now about $483) per share, after which Monsanto walked.
Now that Monsanto has abandoned its takeover attempts, Syngenta is left with shareholders who may be disappointed that negotiations were not further pursued. This divestiture and buyback are one way to reassure shareholders, but Syngenta may have to do more to impress the investors who were not convinced by Syngenta management's ability to execute its strategy or by the current earnings goals for 2018, according to the survey.